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U.S. Credit Rating Downgraded as Debt Concerns Mount
Moody’s has officially downgraded the United States’ credit rating from Aaa to Aa1, citing concerns over rising debt and growing interest costs. This marks the end of an era, as Moody’s was the last major ratings agency to maintain a triple-A rating for U.S. sovereign debt.
The downgrade follows years of fiscal deficits and political gridlock, with successive administrations failing to implement measures to curb spending and stabilize the nation’s financial outlook. Moody’s noted that federal deficits are expected to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024.
The decision has sparked debate among policymakers, with some viewing it as a wake-up call for fiscal responsibility, while others criticize the move as an overreaction. The White House has pushed back against the downgrade, arguing that the U.S. economy remains resilient and that efforts to balance the budget are underway.
Despite the downgrade, Moody’s emphasized that the U.S. retains exceptional credit strengths, including the size and dynamism of its economy and the global role of the U.S. dollar. However, the agency warned that without significant policy changes, the nation’s debt burden could continue to rise, potentially impacting future economic stability.
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